Umbrella Insurance Policy - a best practice list

[Alex M.]

I'm looking into umbrella insurance policies, as I have a recently created LLC and one property to cover, with another on the way, and a pipeline of anticipated consistent growth over the next 12 months. I initially tried calling Allstate, as I have my personal property and another rental (not under the LLC) insured through them. However, I'm not yet satisfied with what they have offered. In doing a little more research online, I came across a great list of things to consider when shopping for umbrella policies - most of which, I was not thinking about. The list seems really helpful, so I'm sharing here:

1. 1. Make sure the policy has an All Risks provision.
2. 2. Make sure that you understand what the "vacant property coverage" is - i.e. read the fine print.
3. 3. Be sure to have a Loss of Rents provision.
4. 4. Don't take the basic liability coverage - pay the extra to go to $500k or $1M
5. 5. If you have a property manager (or even if you don't yet - you may get one later), make sure they are covered, or there is the option to add them as an "additional insured".
6. 6. Companies change their policies a lot, so don't just take someone's recommendation. Shop around.
7. 7. Get a Commercial Umbrella Policy - Personal Umbrellas can just deny coverage without warning if you have more than their "limit" of properties (usually 3 or 4).

The full list with more explanations is here.

So this is where I am starting in regards to searching for a good scalable policy for my LLC-owned rentals. Would you add or remove anything from this list?

[Joe Bertolino]

James Syed You can get an umbrella policy with a single commercial property. My 02 cents on insurance for investors is that you are usually much better off with an independent insurance agent. Call around and set up an in person meeting and bring in all of your current policies. Do NOT treat each insurance policy different and shop online piece by piece. Look at the big picture and make sure your policies are working together so there are no gaps or miscommunications. You will usually save a significant amount of money and have a single point of contact. Allstate, State Farm, Liberty Mutual, etc are great companies but their underwriting guidelines are not structured to allow their agents to provide the right products to most investors. If you have a home, car and a duplex they are fine. As your investing gets more complex (any significant vacancy or rehab, more units, older properties, etc) they quickly run out of options. If you happen to find a great Farmers agent (a rare find but they do exist) then they can often put something together as Farmers is more flexible than the others mentioned.